Market exit and barriers to exit: Theory and practice

Karakaya, Fahri

doi:10.1002/1520-6793(200008)17:8<651::aid-mar1>3.0.co;2-k

Cited by 61 publications

(37 citation statements)

References 27 publications

(25 reference statements)

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“…Various reasons are given why a company would want or need to withdraw from a market (Dasgupta and Stiglitz 1981;Karakaya 2000;Pauwels and Matthyssens 2002). Johnson and Scholes (1999) summarise them as follows:…”

Section: Reasons For Market Withdrawalmentioning

confidence: 99%

“…European aircraft manufacturers from the regional aircraft market 71 Karakaya (2000) draws attention to factors that discourage exit. An important exit barrier for the aerospace industry is cost of divestment such as write-off of development costs and production tools, compensation claims from clients because of a perceived or real drop in residual value of their aircraft, loss of goodwill, loss of income from maintenance and support services and so on.…”

Section: Reasons For Market Withdrawalmentioning

confidence: 99%

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Common factors in the withdrawal of European aircraft manufacturers from the regional aircraft market

Heerkens

Bruijn

Steenhuis

2010

Technology Analysis & Strategic Management

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We investigate whether there were common causes for the withdrawal from the regional aircraft market of three established manufacturers (BAE Systems, Fokker and Saab), while competitors thrived. We focus on the markets for 50-and 100-seat aircraft. One cause concerning the 50-seat market was the introduction of a new class of aircraft, the regional jet, which pushed the less successful turboprop aircraft from the market. Turboprop aircraft that had been relatively successful before the introduction of regional jets survived. A probable reason for the withdrawal of BAE Systems and Fokker from the 100-seat market (in which Saab was not present) was that their products were 'standalone' aircraft, while those of their successful competitors were members of aircraft families, the larger members being far more successful. It was not the availability of technology that determined the success of regional aircraft manufacturers, but the application of (suppliers') technology in new products.

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Section: Reasons For Market Withdrawalmentioning

confidence: 99%

Section: Reasons For Market Withdrawalmentioning

confidence: 99%

Common factors in the withdrawal of European aircraft manufacturers from the regional aircraft market

Heerkens

Bruijn

Steenhuis

2010

Technology Analysis & Strategic Management

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“…Particularly in capital-intensive industries failing businesses are likely to be divested. In some cases exit is an adequate solution when performance is poor even though markets are actually viable (Hamilton & Chow, 1993;Karakaya, 2000;Ravenscraft & Scherer, 1991;Shimizu & Hitt, 2005).…”

Section: Performancementioning

confidence: 99%

“…The resources that were released as a result of the exit were needed by other units which offered better growth prospects for the future. Further resource commitments to the aluminum business would have been valuedestroying for the whole firm (Dranikoff et al, 2002;Duhaime & Grant, 1984;Kaiser & Stouraitis, 2001;Karakaya, 2000).…”

Section: Strategymentioning

confidence: 99%

Thirty Years After Michael E. Porter: What Do We Know About Business Exit?

Decker

Mellewigt

2007

AMP

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Executive OverviewAlthough a business exit is an important corporate change initiative, the buyer's side seems to be more appealing to management researchers than the seller's because acquisitions imply growth, i.e., success. Yet from an optimistic viewpoint, business exit can effectively create value for the selling company. In this paper we attempt to bring the relevance of the seller's side back into our consciousness by asking: What do we know about business exit? We start our exploration with Porter (1976), focusing on literature that investigates the antecedents of, barriers to, and outcomes of business exit. We also include studies from related fields such as finance and economics. 1 Through this research we determine three clusters of findings: factors promoting business exit, exit barriers, and exit outcomes. Overall, it is the intention of this paper to highlight the importance of business exit for research and practice. Knowing what we know about business exits and their high financial value we should bear in mind that exit need not mean failure but a new beginning for a corporation.B usiness exit is an asset restructuring activity involving a diversified firm's divestiture of one of its businesses, such as Intel's abandonment of its DRAM business (Burgelman, 1996). Interest in this topic can be traced back to publications that represent milestones in economic research such as Bain (1956), who established the concept of barriers to entry, Caves ' (1964) analysis of the American industry, and the seminal article on exit barriers by Porter published in California Management Review in 1976, which helped raise the interest in business exit among a broad audience. Data from the U.S. illustrate that business exit continues to be relevant (cf. Figure 1). In the U.S., business services, real estate, and software were the most active divesting industries in 2005. A recent study by the consulting company Accenture highlights the growing relevance of business exits for years to come and predicts that " [f]or the next years, many companies will give far more thought to divestitures than they did in the late 1990s" (Anslinger, Jenk, & Chanmugam, 2003).Although a business exit is an important corporate change initiative, the buyer's side seems to be more appealing to management researchers than the seller's because acquisitions imply growth, i.e., success. This preference for the "success" side can be seen at the industry level as well. Managers, for example, may resist business exit because it is afflicted with the stigma of failure and is often seen as a result of poor corporate management. The reluctance of managers to admit that their organization or at least parts of it are in trouble is evidence of their substantial personal preoccupation with growth and their large personal costs in case of exit (Gilson, 1989). Yet from an optimistic point of view, business exit can effectively create value for the selling company. Indeed, the stigma certainly wasn't a factor for former GE CEO Jack Welch. Under his leadersh...

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“…15 This translates into around d4.3 billion of policyholders' surplus tied up with run-off nonlife insurance firms in the market. Another survey by KPMG 16 for life insurance shows run-off liabilities amounting to d118 billion, or 14 per cent of liabilities of all 12 Karakaya (2000). 13 Association of Run-off Companies (2003).…”

mentioning

confidence: 99%

Can Insurance Firms Easily Exit from the Market? A Global Comparative Analysis of Regulatory Structures

Kwon

Kim

Lee

2005

Geneva Pap Risk Insur Issues Pract

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This paper deals with market exit issues in the insurance industry. It examines theoretical and practical aspects of exit regulation in insurance as well as internal and external factors that firms may use to select a market exit strategy. From comparing regulatory stringency and permitted forms of market exit in selected countries in Asia, Europe, and North America, the authors find several commonalities. That is, regulators tend to accentuate their responsibility for protecting policyholders' interests, be deeply involved in most exit processes, and prefer other forms of exit (e.g., buy-out of liabilities or a complete acquisition of business by another firm) than immediate dissolution of insurers. However, not all governments examined are ready to effectively deal with matters related to insurers' exits from the market. Some governments need better structured regulation and some transparency in market exit regulation.

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Market exit and barriers to exit: Theory and practice

Cited by 61 publications

References 27 publications

Common factors in the withdrawal of European aircraft manufacturers from the regional aircraft market

Common factors in the withdrawal of European aircraft manufacturers from the regional aircraft market

Thirty Years After Michael E. Porter: What Do We Know About Business Exit?

Can Insurance Firms Easily Exit from the Market? A Global Comparative Analysis of Regulatory Structures

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